Rob Mason

Rob Mason asked Satish Dhanasekaran about the positioning business acquired with Spirent, inquiring how this new capability would layer across Keysight's portfolio, particularly in aerospace defense, and where Keysight's existing relationships could add incremental value. He also asked Neil Dougherty for guidance on the cadence of M&A revenue contribution for the year, noting that Q1 guidance seemed above the typical run rate.

Answer

Satish Dhanasekaran, President and CEO, expressed excitement about Spirent's positioning capabilities (simulating satellite environments in a lab), seeing significant upgraded opportunities in automotive, 6G, and aerospace defense. Kailash Narayanan, President of the Communication Solutions Group, added that they see opportunities to bundle these capabilities with existing physical and protocol layer solutions, enhancing their portfolio for NTN design activity, satellite constellation emulation, and channel emulation. Neil Dougherty, CFO, stated that M&A revenue is roughly 75% CSG and 25% EISG, with close to 30% expected in Q1 and the remaining three quarters relatively even, based on prior business behavior.

Rob Mason asked Satish Dhanasekaran about the positioning business acquired with Spirent, inquiring how this new capability layers across Keysight's portfolio and where Keysight's relationships can add incremental value. He also asked CFO Neil Dougherty for guidance on the cadence of M&A revenue contribution for the year, specifically noting Spirent's historical second-half weighting.

Answer

President and CEO Satish Dhanasekaran expressed excitement about Spirent's positioning capabilities (simulating satellite environments in a lab), seeing significant upgraded opportunities in automotive (autonomous systems, integrated sensing and communication), and aerospace defense (jamming, spoofing). Kailash Narayanan, President of the Communication Solutions Group, added that as LEO and NTN applications scale, Keysight plans to bundle these capabilities with its physical and protocol layer solutions, enhancing its portfolio for satellite constellation and orbital emulation. CFO Neil Dougherty stated that M&A revenue is expected to skew towards Q1 (approaching 30%), with the remaining three quarters being relatively equal, based on prior business behavior, but noted that integration might shift this alignment.

Rob Mason inquired about the Westinghouse strategic partnership, how it functions on the new build side, and how Paragon's potential relationship with Westinghouse would integrate into this commentary.

Answer

Thomas Logan, Founder, Chairman and CEO, highlighted Westinghouse as a critically important historical customer. He expressed confidence that with Paragon, Mirion's relevance and solution set for Westinghouse and other nuclear reactor designers would swell, improving positioning for both new build activity and system upgrades.

Rob Mason inquired about the functionality of Mirion's strategic partnership with Westinghouse concerning new nuclear builds, and how Paragon's potential relationship with Westinghouse might integrate into this.

Answer

Thomas Logan, Founder, Chairman and CEO, Mirion, emphasized Westinghouse as a crucial customer and expressed satisfaction with the NFMS agreement. He highlighted that Paragon's acquisition would enhance Mirion's relevance and solution set for Westinghouse and other nuclear reactor designers, improving positioning for both system upgrades and new build activities.

Rob Mason inquired about the expected lack of normal seasonal uplift in Q4 2025, specifically if it's solely due to fire service issues, and sought clarification on how AFG funding delays and the U.S. government shutdown impact customer order placement. He also asked about the normalized SG&A rate for future quarters.

Answer

Julie Beck, Senior Vice President and CFO, confirmed that Q4 2025 would not see much normal seasonal uplift, remaining relatively consistent with Q3, primarily due to fire service dynamics. Steve Blanco, President and CEO, elaborated that delays in AFG funding awards and the government shutdown slow down the process for fire departments to accept awards and place orders, impacting the typical late Q3/early Q4 order pace. Ms. Beck also stated that Q4 SG&A is expected to return to more normal levels after Q3's lower rate.

Rob Mason asked for more detail on EMEA demand trends, including month-to-month or quarterly trends into Q4, given its continued softness. Conversely, he inquired about the drivers of Asia Pacific's double-digit growth over the past five quarters, whether it's broadening customer base or project-specific, and its outlook. He also asked about the increase in stock compensation, its expected trend into 2026, and its drivers.

Answer

CEO Bill Burns provided a regional breakdown: North America saw strength in mobile computing and printing, with some Q3 demand pull-in for peak season, but Canada was softer. EMEA showed mixed performance, with Northern Europe doing well but Germany and France (especially manufacturing/retail) challenged. Asia Pacific's strong growth was driven by investments in Japan (e.g., postal service wins) and growth in India, Australia, and New Zealand. Latin America also had a record quarter. CFO Nathan Winters explained that the stock comp increase was due to a plan design change accelerating expense and a Q3 true-up for performance shares, which was an anomaly, expecting normalization in Q4 and 2026.

Rob Mason asked for details on EMEA demand trends, including month-to-month or quarterly performance into Q4, given its softness. He also inquired about the drivers of Asia Pacific's double-digit growth over the past five quarters and its forward outlook, as well as the trend and drivers of stock compensation.

Answer

CEO Bill Burns provided a regional breakdown: North America saw strength in mobile computing and printing, with some Q3 pull-in for peak demand. EMEA remained mixed, similar to Q2, with Northern Europe performing well but Germany and France challenged. Asia Pacific showed strong growth, driven by investments in Japan (e.g., postal service applications) and strength in India, Australia, and New Zealand. Latin America achieved a record quarter with broad-based strength. CFO Nathan Winters explained that stock compensation saw an anomaly in Q3 due to a true-up for performance shares and earlier accounting changes, expecting normalization in Q4 and 2026.

Rob Mason of Baird asked about the deployment progress of break pack systems and sought clarification on whether the complexity in lower-margin projects was due to new features or installation challenges.

Answer

CEO Rick Cohen confirmed a second break pack system is being deployed, with more to follow, and noted a redesign of the mini bot has improved margins and customer satisfaction. CFO Carol Hibbard clarified that the lower margins on certain complex projects were not due to new features but rather because they are older projects that started with lower margins. As these are completed, the overall margin mix will improve.